8-K
false000072360300007236032024-03-062024-03-06

 

 

UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549

 

FORM 8-K

 

CURRENT REPORT

Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934

Date of Report (Date of earliest event reported): March 06, 2024

 

 

Culp, Inc.

(Exact name of Registrant as Specified in Its Charter)

 

 

North Carolina

1-12597

56-1001967

(State or Other Jurisdiction
of Incorporation)

(Commission File Number)

(IRS Employer
Identification No.)

 

 

 

 

 

1823 Eastchester Drive

 

High Point, North Carolina

 

27265

(Address of Principal Executive Offices)

 

(Zip Code)

 

Registrant’s Telephone Number, Including Area Code: 336 889-5161

 

 

(Former Name or Former Address, if Changed Since Last Report)

 

Check the appropriate box below if the Form 8-K filing is intended to simultaneously satisfy the filing obligation of the registrant under any of the following provisions:

Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425)
Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12)
Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b))
Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c))

Securities registered pursuant to Section 12(b) of the Act:


Title of each class

 

Trading
Symbol(s)

 


Name of each exchange on which registered

Common stock, par value $0.05 per share

 

CULP

 

The New York Stock Exchange

Indicate by check mark whether the registrant is an emerging growth company as defined in Rule 405 of the Securities Act of 1933 (§ 230.405 of this chapter) or Rule 12b-2 of the Securities Exchange Act of 1934 (§ 240.12b-2 of this chapter).

Emerging growth company

If an emerging growth company, indicate by check mark if the registrant has elected not to use the extended transition period for complying with any new or revised financial accounting standards provided pursuant to Section 13(a) of the Exchange Act.

 

 


 

This report and the exhibit attached hereto contain “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management’s expectations or any change in the assumptions or circumstances on which such statements are based, whether due to new information, future events, or otherwise. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations, projections, or trends for our future operations, strategic initiatives and plans, production levels, new product launches, sales, profit margins, profitability, operating (loss) income, capital expenditures, working capital levels, cost savings, income taxes, SG&A or other expenses, pre-tax (loss) income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding dividends, share repurchases, liquidity, uses of cash and cash requirements, borrowing capacity, investments, potential acquisitions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that we will realize these expectations or meet our guidance, or that these beliefs will prove correct.

Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, including changes in U.S. trade enforcement priorities, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places. In addition, because our foreign operations use the U.S. dollar as their functional currency, changes in the exchange rate between the local currency of those operations and the U.S dollar can affect our reported profits from those foreign operations. Also, economic or political instability in international areas could affect our operations or sources of goods in those areas, as well as demand for our products in international markets. The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the global coronavirus pandemic that has affected countries around the world, could also adversely affect our operations and financial performance. In addition, the impact of potential asset impairments, including impairments of property, plant, and equipment, inventory, or intangible assets, as well as the impact of valuation allowances applied against our net deferred income tax assets, could affect our financial results. Increases in freight costs, labor costs, and raw material prices, including increases in market prices for petrochemical products, can also significantly affect the prices we pay for shipping, labor, and raw materials, respectively, and in turn, increase our operating costs and decrease our profitability. Finally, our success in diversifying our supply chain with reliable partners to effectively service our global platform could affect our operations and adversely affect our financial results. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our most recent Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results.

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Item 2.02 – Results of Operations and Financial Condition

On March 6, 2024, we issued a news release to announce our financial results for our third quarter ended January 28, 2024. A copy of the news release is attached hereto as Exhibit 99.1.

The information set forth in this Item 2.02 of this Current Report, and in Exhibit 99.1, is intended to be “furnished” under Item 2.02 of Form 8-K. Such information shall not be deemed “filed” for the purposes of Section 18 of the Securities Exchange Act of 1934, as amended, nor shall it be deemed incorporated by reference in any filing under the Securities Act of 1933, as amended, except as shall be expressly set forth by specific reference in such filing.

The news release contains adjusted income statement information for the three and nine-month periods ending January 28, 2024, and January 29, 2023, respectively, which disclose adjusted loss from operations, a non-U.S. GAAP performance measure that eliminates items which are not expected to occur on a recurring or regular basis. For the three and nine-month periods ending January 28, 2024, these items include, as applicable for the period presented, restructuring-related credits, restructuring-related charges, and restructuring expense associated with the discontinued production of cut and sewn upholstery kits in Ouanaminthe, Haiti. For the three and nine- month periods ending January 29, 2023, these items include restructuring expense associated with the consolidation of certain leased facilities located in Ouanaminthe, Haiti, during the third quarter of fiscal 2023, as well as restructuring expense and restructuring-related charges associated with the exit of the company's cut and sew upholstery fabrics operation located in Shanghai, China, during the second quarter of fiscal 2023. The company has included this adjusted information in order to show operational performance excluding the effects of items not expected to occur on a recurring or regular basis. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. Management believes this presentation aids in the comparison of financial results among comparable financial periods. Management uses adjusted income statement information in evaluating the financial performance of our overall operations and business segments. Also, adjusted income statement information is used as a performance measure in our incentive-based executive compensation program. We note, however, that this adjusted income statement information should not be viewed in isolation or as a substitute for loss from operations calculated in accordance with U.S. GAAP.

The news release contains disclosures about free cash flow, a non-U.S. GAAP liquidity measure that we define as net cash (used in) provided by operating activities, less cash capital expenditures and payments on vendor-financed capital expenditures, plus any proceeds from sale of property, plant, and equipment, plus proceeds from note receivable, plus proceeds from the sale of investments associated with our rabbi trust, less the purchase of investments associated with our rabbi trust, and plus or minus the effects of foreign currency exchange rate changes on cash and cash equivalents, in each case to the extent any such amount is incurred during the period presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. Management believes the disclosure of free cash flow provides useful information to investors because it measures our available cash flow for potential debt repayment, stock repurchases, dividends, additions to cash and investments, or other corporate purposes. We note, however, that not all of the company’s free cash flow is available for discretionary spending, as we may have mandatory debt payments and other cash requirements that must be deducted from our cash available for future use. In operating our business, management uses free cash flow to make decisions about what commitments of cash to make for operations, such as capital expenditures (and possible financing arrangements for these expenditures), purchases of inventory or supplies, SG&A expenditure levels, compensation, and other commitments of cash, while still allowing for adequate cash to meet known future commitments for cash, such as debt repayment, and also for making decisions about dividend payments and share repurchases.

The news release contains disclosures about our Adjusted EBITDA, which is a non-U.S. GAAP performance measure that reflects net (loss) income excluding income tax expense (benefit), net interest income, and restructuring expense or credit and restructuring related charges or credits, as well as depreciation and amortization expense, and stock-based compensation expense. This measure also excludes other non-recurring charges and credits associated with our business, if and to the extent any such amount is incurred during the period presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe presentation of Adjusted EBITDA is useful to investors because earnings before interest income and expense, income taxes, depreciation and amortization, and similar performance measures that exclude certain charges from earnings, are often used by investors and financial analysts in evaluating and comparing companies in our industry. We note, however, that such measures are not defined uniformly by various companies, with differing expenses being excluded from net income to calculate these performance measures. For this reason, Adjusted EBITDA should not be viewed in isolation by investors and should not be used as a substitute for net income (loss) calculated in accordance with GAAP, nor should it be used for direct comparisons with similarly titled performance measures reported by other

3


 

companies. Use of Adjusted EBITDA as an analytical tool has limitations in that this measure does not reflect all expenses that are necessary to fund and operate our business, including funds required to pay taxes, service our debt, and fund capital expenditures, among others. Management uses Adjusted EBITDA to help it analyze the company’s earnings and operating performance, by excluding the effects of expenses that depend upon capital structure and debt level, tax provisions, and non-cash items such as depreciation, amortization and stock-based compensation expense that do not require immediate uses of cash.

The news release contains disclosures about return on capital for both the entire company and for individual business segments. We define return on capital as adjusted operating income (loss) (measured on a trailing twelve-month basis) divided by average capital employed (excluding intangible assets related to acquisitions at the divisional level only). Adjusted operating income (loss) excludes certain charges or credits that are not expected to occur on a recurring or regular basis, if applicable for the period presented. Average capital employed is calculated over rolling five fiscal periods, depending on which quarter is being presented. Details of these calculations and a reconciliation to information from our U.S. GAAP financial statements are set forth in the news release. We believe return on capital is an accepted measure of earnings efficiency in relation to capital employed, but it is a non-U.S. GAAP performance measure that is not defined or calculated in the same manner by all companies. This measure should not be considered in isolation or as an alternative to net income (loss) or other performance measures, but we believe it provides useful information to investors by comparing the adjusted operating income (loss) we produce to the net asset base used to generate that income (loss). Also, adjusted operating income (loss) on a trailing twelve-months basis does not necessarily indicate results that would be expected for the full fiscal year or for the following twelve months. We note that, particularly for return on capital measured at the segment level, not all assets and expenses are allocated to our operating segments, and there are assets and expenses at the corporate (unallocated) level that may provide support to a segment’s operations and yet are not included in the assets and expenses used to calculate that segment’s return on capital. Thus, the average return on capital for the company’s segments will generally be different from the company’s overall return on capital. Management uses return on capital to evaluate the company’s earnings efficiency and the relative performance of its segments.

Item 9.01 (d) – Exhibits

 

4


 

EXHIBIT INDEX

 

Exhibit Number

 

Exhibit

 

 

 

99.1

 

News Release dated March 6, 2024

 

 

 

104

 

Cover Page Interactive Data File (embedded within the Inline XBRL document)

 

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SIGNATURES

Pursuant to the requirements of the Securities Exchange Act of 1934, the Registrant has duly caused this report to be signed on its behalf by the undersigned, hereunto duly authorized.

 

 

CULP, INC.

(Registrant)

 

By:

/s/ Kenneth R. Bowling

Chief Financial Officer

(principal financial officer and

principal accounting officer)

 

 

Dated: March 6, 2024

 

 

6


EX-99.1

Exhibit 99.1

 

 

 

https://cdn.kscope.io/db54309f793cc2e3f770b14676554f55-img29555247_0.jpg 

 

 

CULP ANNOUNCES RESULTS FOR THIRD QUARTER FISCAL 2024,

WITH CONTINUED SEQUENTIAL AND YEAR-OVER-YEAR OPERATING IMPROVEMENT

 

 

HIGH POINT, N.C. (March 6, 2024) ─ Culp, Inc. (NYSE: CULP) (together with its consolidated subsidiaries, “CULP”) today reported financial and operating results for the third quarter ended January 28, 2024.

 

Fiscal 2024 Third Quarter Financial Summary

 

Net sales for the third quarter of fiscal 2024 were $60.4 million, up 15.0 percent compared with the prior-year period, with mattress fabrics sales up 21.6 percent, and upholstery fabrics sales up 9.2 percent.
Gross margin for the third quarter of fiscal 2024 was 12.7%, compared with 4.0% for the third quarter of fiscal 2023.
Loss from operations was $(1.7) million (which included $111,000 in restructuring and related credits during the period), compared with a loss from operations of $(7.8) million for the prior-year period (which included $711,000 relating to certain restructuring expenses during the period).
Net loss was $(3.2) million, or $(0.26) per diluted share, compared with a net loss of $(9.0) million, or $(0.73) per diluted share, for the prior-year period. The effective tax rate for the third quarter was negative (47.5) percent, reflecting the company’s mix of taxable income between its U.S. and foreign jurisdictions during the period.
The company maintained a solid financial position, with its balance sheet reflecting $12.6 million of total cash and no outstanding borrowings as of January 28, 2024. Total liquidity as of January 28, 2024, was $38.8 million (consisting of $12.6 million in cash and $26.2 million in borrowing availability under the company's domestic credit facility).

 

CEO Commentary

 

Commenting on the results, Iv Culp, president and chief executive officer of Culp, Inc., said, “We are pleased to report continued year-over-year and sequential improvement in our consolidated sales and operating performance for the third quarter. Both of our core business segments reported increased revenue year-over-year, which is impressive considering the challenging demand environment in the bedding and furniture industries. Additionally, our consolidated operating performance for the quarter was better than our revised outlook announced on January 17, 2024, due to stronger improvement in our upholstery fabrics segment.

 

"Culp upholstery fabrics achieved a year-over-year increase in residential sales for the first quarterly period since the end of last fiscal year, driven by both the timing of the Chinese New Year holiday and some improvement during the quarter in customer demand for residential fabric products. While this increase in residential sales was offset somewhat by lower sales in our hospitality/contract business due partly to weather-related events in January and short-term supply chain issues that affected Read Window, overall demand remains solid for our hospitality/contract business. Also, our upholstery fabrics segment once again saw a significant improvement in operating performance, driven primarily by higher sales, a more profitable mix of sales, and fixed cost savings.

 

"In our mattress fabrics segment, we continued our significant year-over-year improvement in sales and operating performance, driven largely by a focus on new fabric and cover placements that are priced with proper margins and in line with current raw material costs. However, the sequential results

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CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 2

March 6, 2024

 

for this segment, as compared to the second quarter, reflect ongoing market weakness in the bedding industry, as well as internal efficiency issues primarily related to the start-up and production of certain new products and costs for these program launches that occurred during the quarter.

 

“We maintained our solid balance sheet during the quarter, with a continued focus on prudent financial management, while allowing for critical capital expenditures and ensuring a strategic level of working capital to support the needs of our businesses. We ended the quarter with $12.6 million in cash, no outstanding borrowings, and $26.2 million in borrowing availability under our domestic credit facility.

 

“As we enter the fourth quarter, we continue to implement improvement initiatives within our mattress fabrics segment to support future profitable sales growth and enhance operating efficiencies. We are diligently focused on winning new placements to drive revenue and increase margins, and we are optimistic about mid-to-long term growth potential for this business. However, while we knew the timing of Chinese New Year would be an impact on quarterly revenue, the industry demand backdrop in both of our businesses has deteriorated further than expected during the first few weeks of the fourth quarter, especially in our upholstery fabrics segment.

 

"We remain confident in our market position in both of our businesses, but to maintain our sequential progress, we need some macro-industry and end-consumer support. Also, the internal inefficiencies relating to the start up and production of certain new products in mattress fabrics during the third quarter will also affect operating performance during the fourth quarter. As a result of these challenges, we now expect that our return to consolidated operating profitability will be delayed into fiscal 2025.

 

"In the face of various ongoing macro-economic headwinds, our attention is on managing the aspects of our business we can control. With the uncertainty of consumer demand in the near term, we are also evaluating strategic actions to adjust and right-size our global platform to align with current demand levels, while still supporting our valued customers. Importantly, we remain well positioned for the long term with our solidly performing upholstery fabrics business and a recovering mattress fabrics business. We are committed to taking steps to position our business for renewed profitability in fiscal 2025, and we are confident in our ability to leverage our competitive advantages, including our innovative product offerings, creative designs, global manufacturing and sourcing platform, and solid financial management, to support our future growth, especially when market conditions improve," added Culp.

 

Business Segment Highlights

 

Mattress Fabrics Segment (“CHF”) Summary

 

Sales for this segment were $30.0 million for the third quarter, up 21.6 percent compared with sales of $24.7 million in the third quarter of fiscal 2023.

 

The higher sales, as compared to the prior-year period, were primarily driven by new fabric and sewn cover placements that are priced in line with current costs.

 

Operating loss was $(1.6) million for the third quarter, a significant improvement compared to the $(4.2) million operating loss in the prior-year period. This reduction in losses was driven by higher sales, coming mostly from better pricing and a more favorable product mix. These factors were partially offset by production inefficiencies relating to the start up of certain new product launches, as well as higher SG&A business investments during the period.

 

Upholstery Fabrics Segment (“CUF”) Summary

 

Sales for this segment were $30.4 million for the third quarter, up 9.2 percent compared with sales of $27.8 million in the third quarter of fiscal 2023.

 

Sales for CUF's residential fabric business were higher than the prior-year period, driven by improved residential home furnishing sales, as well as the timing of the Chinese New Year holiday (which this year fell primarily in the fourth quarter, rather than the third quarter).

 

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CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 3

March 6, 2024

 

Sales for CUF's hospitality/contract business were moderately lower than the prior-year period due primarily to the impact of winter weather events and short-term supply chain issues that affected production in our Read Window business, as well as some impact from increased construction costs affecting demand for new and ongoing hospitality/contract projects. Sales for the hospitality/contract business accounted for approximately 26 percent of CUF's total sales during the quarter.

 

Operating income was $2.1 million for the third quarter, up significantly compared with an operating loss of $(420,000) in the third quarter of fiscal 2023. Operating margin for the third quarter was 6.9 percent, again a significant improvement compared to the prior-year period. Operating performance for the third quarter was positively affected by higher sales volume; a more profitable mix of sales; a more favorable foreign exchange rate associated with CUF's operations in China; and lower fixed costs resulting from the previous restructuring of CUF's cut and sew platforms. These factors were partially offset by higher SG&A business investments during the period.

 

Balance Sheet, Cash Flow, and Liquidity

 

As of January 28, 2024, the company reported $12.6 million in total cash and no outstanding debt.

 

Cash flow from operations and free cash flow were negative $(6.0) million and negative $(8.2) million, respectively, for the first nine months of fiscal 2024. (See reconciliation table at the back of this press release.) As expected, the company’s cash flow from operations and free cash flow during the period were affected by operating losses and planned strategic investments in capital expenditures mostly related to the CHF transformation plan.

 

Capital expenditures for the first nine months of fiscal 2024 were $3.2 million. The company continues to manage capital investments, focusing on projects that will increase efficiencies and improve quality, especially for the CHF segment.

 

As of January 28, 2024, the company had approximately $38.8 million in liquidity, consisting of $12.6 million in total cash and $26.2 million in borrowing availability under the company's domestic credit facility.

 

Share Repurchases

 

The company did not repurchase any shares during the third quarter of fiscal 2024, leaving approximately $3.2 million available under the current share repurchase program as of January 28, 2024. Despite the current share repurchase authorization, the company does not expect to repurchase any shares during the fourth quarter of fiscal 2024.

Financial Outlook

Due to the uncertainty in the macro-environment, the company is only providing financial guidance for the fourth quarter of fiscal 2024. The company’s consolidated net sales for the fourth quarter are expected to be lower as compared to the fourth quarter of fiscal 2023. This is due partly to the timing of the Chinese New Year holiday (which this year falls primarily in the fourth quarter, as compared to the third quarter last year), as well as weakness in the industry demand environment that is expected to pressure sales in both of the company's business segments, especially in the residential upholstery fabrics business. The company also expects a consolidated operating loss (loss from operations) for the fourth quarter of fiscal 2024 that is comparable to the fourth quarter of fiscal 2023.
The company’s expectations are based on information available at the time of this press release and reflect certain assumptions by management regarding the company’s business and trends and the projected impact of the ongoing headwinds.

 

Conference Call

 

Culp, Inc. will hold a conference call to discuss financial results for the third quarter of fiscal 2024 on March 7, 2024, at 11:00 a.m. Eastern Time. A live webcast of this call can be accessed on the

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CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

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March 6, 2024

 

“Upcoming Events” section on the investor relations page of the company’s website, www.culp.com. A replay of the webcast will be available for 30 days under the “Past Events” section on the investor relations page of the company’s website, beginning at 2:00 p.m. Eastern Time on March 7, 2024.

 

Investor Relations Contact

Ken Bowling, Executive Vice President, Chief Financial Officer, and Treasurer:

(336) 881-5630

krbowling@culp.com

 

 

 

About the Company

 

Culp, Inc. is one of the world’s largest marketers of mattress fabrics for bedding and upholstery fabrics for residential and commercial furniture. The company markets a variety of fabrics to its global customer base of leading bedding and furniture companies, including fabrics produced at Culp’s manufacturing facilities and fabrics sourced through other suppliers. Culp has manufacturing and sourcing capabilities located in the United States, Canada, China, Haiti, Turkey, and Vietnam.

 

 

Forward Looking Statements

 

This release contains “forward-looking statements” within the meaning of the federal securities laws, including the Private Securities Litigation Reform Act of 1995 (Section 27A of the Securities Act of 1933 and Section 21E of the Securities and Exchange Act of 1934). Such statements are inherently subject to risks and uncertainties that may cause actual events and results to differ materially from such statements. Further, forward looking statements are intended to speak only as of the date on which they are made, and we disclaim any duty to update such statements to reflect any changes in management’s expectations or any change in the assumptions or circumstances on which such statements are based, whether due to new information, future events, or otherwise. Forward-looking statements are statements that include projections, expectations, or beliefs about future events or results or otherwise are not statements of historical fact. Such statements are often but not always characterized by qualifying words such as “expect,” “believe,” “anticipate,” “estimate,” “intend,” “plan,” “project,” and their derivatives, and include but are not limited to statements about expectations, projections, or trends for our future operations, strategic initiatives and plans, production levels, new product launches, sales, profit margins, profitability, operating income, capital expenditures, working capital levels, cost savings, income taxes, SG&A or other expenses, pre-tax income, earnings, cash flow, and other performance or liquidity measures, as well as any statements regarding dividends, share repurchases, liquidity, use of cash and cash requirements, borrowing capacity, investments, potential acquisitions, future economic or industry trends, public health epidemics, or future developments. There can be no assurance that we will realize these expectations or meet our guidance, or that these beliefs will prove correct.

 

Factors that could influence the matters discussed in such statements include the level of housing starts and sales of existing homes, consumer confidence, trends in disposable income, and general economic conditions. Decreases in these economic indicators could have a negative effect on our business and prospects. Likewise, increases in interest rates, particularly home mortgage rates, and increases in consumer debt or the general rate of inflation, could affect us adversely. The future performance of our business depends in part on our success in conducting and finalizing acquisition negotiations and integrating acquired businesses into our existing operations. Changes in consumer tastes or preferences toward products not produced by us could erode demand for our products. Changes in tariffs or trade policy, including changes in U.S. trade enforcement priorities, or changes in the value of the U.S. dollar versus other currencies, could affect our financial results because a significant portion of our operations are located outside the United States. Strengthening of the U.S. dollar against other currencies could make our products less competitive on the basis of price in markets outside the United States, and strengthening of currencies in Canada and China can have a negative impact on our sales of products produced in those places. In addition, because our foreign operations use the U.S. dollar as their functional currency, changes in the exchange rate between the local currency of those operations and the U.S dollar can affect our reported profits from those foreign operations. Also, economic or political instability in international areas could affect our operations or

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CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 5

March 6, 2024

 

sources of goods in those areas, as well as demand for our products in international markets. The impact of public health epidemics on employees, customers, suppliers, and the global economy, such as the global coronavirus pandemic currently affecting countries around the world, could also adversely affect our operations and financial performance. In addition, the impact of potential asset impairments, including impairments of property, plant, and equipment, inventory, or intangible assets, as well as the impact of valuation allowances applied against our net deferred income tax assets, could affect our financial results. Increases in freight costs, labor costs, and raw material prices, including increases in market prices for petrochemical products, can also significantly affect the prices we pay for shipping, labor, and raw materials, respectively, and in turn, increase our operating costs and decrease our profitability. Finally, our success in diversifying our supply chain with reliable partners to effectively service our global platform could affect our operations and adversely affect our financial results. Further information about these factors, as well as other factors that could affect our future operations or financial results and the matters discussed in forward-looking statements, is included in Item 1A “Risk Factors” in our most recent Form 10-K and Form 10-Q reports filed with the Securities and Exchange Commission. A forward-looking statement is neither a prediction nor a guarantee of future events or circumstances, and those future events or circumstances may not occur. Additional risks and uncertainties that we do not presently know about or that we currently consider to be immaterial may also affect our business operations and financial results.

 

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CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

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March 6, 2024

 

CULP, INC.

CONSOLIDATED STATEMENTS OF NET LOSS

FOR THE THREE MONTHS ENDED JANUARY 28, 2024, AND JANUARY 29, 2023

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

 

 

THREE MONTHS ENDED

 

 

 

Amount

 

 

 

 

 

Percent of Sales

 

 

 

(1)

 

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

January 28,

 

 

January 29,

 

 

% Over

 

 

January 28,

 

 

January 29,

 

 

 

2024

 

 

2023

 

 

(Under)

 

 

2024

 

 

2023

 

Net sales

 

$

60,418

 

 

$

52,523

 

 

 

15.0

%

 

 

100.0

%

 

 

100.0

%

Cost of sales (2)

 

 

(52,715

)

 

 

(50,430

)

 

 

4.5

%

 

 

87.3

%

 

 

96.0

%

Gross profit

 

 

7,703

 

 

 

2,093

 

 

 

268.0

%

 

 

12.7

%

 

 

4.0

%

Selling, general and administrative
   expenses

 

 

(9,493

)

 

 

(9,165

)

 

 

3.6

%

 

 

15.7

%

 

 

17.4

%

Restructuring credit (expense) (3) (4)

 

 

50

 

 

 

(711

)

 

 

(107.0

)%

 

 

(0.1

)%

 

 

1.4

%

Loss from operations

 

 

(1,740

)

 

 

(7,783

)

 

 

(77.6

)%

 

 

(2.9

)%

 

 

(14.8

)%

Interest income

 

 

284

 

 

 

196

 

 

 

44.9

%

 

 

0.5

%

 

 

0.4

%

Other expense

 

 

(705

)

 

 

(1,095

)

 

 

(35.6

)%

 

 

(1.2

)%

 

 

(2.1

)%

Loss before income taxes

 

 

(2,161

)

 

 

(8,682

)

 

 

(75.1

)%

 

 

(3.6

)%

 

 

(16.5

)%

Income tax expense (5)

 

 

(1,027

)

 

 

(286

)

 

 

259.1

%

 

 

(47.5

)%

 

 

(3.3

)%

Net loss

 

$

(3,188

)

 

$

(8,968

)

 

 

(64.5

)%

 

 

(5.3

)%

 

 

(17.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic

 

$

(0.26

)

 

$

(0.73

)

 

 

(64.4

)%

 

 

 

 

 

 

Net loss per share - diluted

 

$

(0.26

)

 

$

(0.73

)

 

 

(64.4

)%

 

 

 

 

 

 

Average shares outstanding-basic

 

 

12,470

 

 

 

12,299

 

 

 

1.4

%

 

 

 

 

 

 

Average shares outstanding-diluted

 

 

12,470

 

 

 

12,299

 

 

 

1.4

%

 

 

 

 

 

 

 

 

Notes

 

(1) See page 13 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the three months ending January 28, 2024, and January 29, 2023.

 

(2) Cost of sales for the three months ending January 28, 2024, includes a restructuring related credit totaling $61,000 for a gain on disposal of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti. There were no restructuring related credits or charges included in cost of sales for the three months ending January 29, 2023.

 

(3) The restructuring credit of $50,000 for the three months ending January 28, 2024, represents a gain from the sale of equipment associated with the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

(4) Restructuring expense of $711,000 for the three months ending January 29, 2023, represents lease termination costs of $434,000 and an impairment loss for leasehold improvements totaling $277,000 related to the consolidation of certain leased facilities located in Ouanaminthe, Haiti.

 

(5) Percent of sales column for income tax expense is calculated as a percent of loss before income taxes.

 

 

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 7

March 6, 2024

 

CULP, INC.

CONSOLIDATED STATEMENTS OF NET LOSS

FOR THE NINE MONTHS ENDED JANUARY 28, 2024, AND JANUARY 29, 2023

Unaudited

(Amounts in Thousands, Except for Per Share Data)

 

 

 

NINE MONTHS ENDED

 

 

 

Amount

 

 

 

 

 

Percent of Sales

 

 

 

(1)

 

 

(1)

 

 

 

 

 

 

 

 

 

 

 

 

January 28,

 

 

January 29,

 

 

% Over

 

 

January 28,

 

 

January 29,

 

 

 

2024

 

 

2023

 

 

(Under)

 

 

2024

 

 

2023

 

Net sales

 

$

175,804

 

 

$

173,508

 

 

 

1.3

%

 

 

100.0

%

 

 

100.0

%

Cost of sales (2) (3)

 

 

(153,067

)

 

 

(169,500

)

 

 

(9.7

)%

 

 

87.1

%

 

 

97.7

%

Gross profit

 

 

22,737

 

 

 

4,008

 

 

 

467.3

%

 

 

12.9

%

 

 

2.3

%

Selling, general and administrative
   expenses

 

 

(29,366

)

 

 

(27,133

)

 

 

8.2

%

 

 

16.7

%

 

 

15.6

%

Restructuring expense (4) (5)

 

 

(432

)

 

 

(1,326

)

 

 

(67.4

)%

 

 

0.2

%

 

 

0.8

%

Loss from operations

 

 

(7,061

)

 

 

(24,451

)

 

 

(71.1

)%

 

 

(4.0

)%

 

 

(14.1

)%

Interest income

 

 

911

 

 

 

292

 

 

 

212.0

%

 

 

0.5

%

 

 

0.2

%

Other expense

 

 

(560

)

 

 

(348

)

 

 

60.9

%

 

 

0.3

%

 

 

0.2

%

Loss before income taxes

 

 

(6,710

)

 

 

(24,507

)

 

 

(72.6

)%

 

 

(3.8

)%

 

 

(14.1

)%

Income tax expense (6)

 

 

(2,244

)

 

 

(2,332

)

 

 

(3.8

)%

 

 

(33.4

)%

 

 

(9.5

)%

Net loss

 

$

(8,954

)

 

$

(26,839

)

 

 

(66.6

)%

 

 

(5.1

)%

 

 

(15.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Net loss per share - basic

 

$

(0.72

)

 

$

(2.19

)

 

 

(67.1

)%

 

 

 

 

 

 

Net loss per share - diluted

 

$

(0.72

)

 

$

(2.19

)

 

 

(67.1

)%

 

 

 

 

 

 

Average shares outstanding-basic

 

 

12,419

 

 

 

12,272

 

 

 

1.2

%

 

 

 

 

 

 

Average shares outstanding-diluted

 

 

12,419

 

 

 

12,272

 

 

 

1.2

%

 

 

 

 

 

 

 

 

Notes

 

(1) See page 14 for the Reconciliation of Selected Income Statement Information to Adjusted Results for the nine months ending January 28, 2024, and January 29, 2023.

 

(2) Cost of sales for the nine months ending January 28, 2024, includes a restructuring related charge totaling $40,000 representing markdowns of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

(3) Cost of sales for the nine months ending January 29, 2023, includes a restructuring related charges totaling $98,000, which pertained to a loss on disposal and markdowns of inventory related to the exit of the company's cut and sew upholstery fabrics operation located in Shanghai, China.

 

(4) Restructuring expense of $432,000 for the nine months ending January 28, 2024, represents impairment charges related to equipment totaling $329,000 and $103,000 for employee termination benefits related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

(5) Restructuring expense of $1.3 million for the nine months ending January 29, 2023, relates to both restructuring activities for the company's cut and sew upholstery fabrics operations located in Shanghai, China, which occurred during the second quarter of fiscal 2023, and located in Ouananminthe, Haiti, which occurred during the third quarter of fiscal 2023. Restructuring expense consists of lease termination costs of $481,000, employee termination benefits of $468,000, impairment losses totaling $357,000 that relate to leasehold improvements and equipment, and $20,000 for other associated costs.

 

(6) Percent of sales column for income tax expense is calculated as a percent of loss before income taxes.

 

 

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 8

March 6, 2024

 

 

CONSOLIDATED BALANCE SHEETS

JANUARY 28, 2024, JANUARY 29, 2023, AND APRIL 30, 2023

Unaudited

(Amounts in Thousands)

 

 

 

Amounts

 

 

 

 

 

 

 

 

 

 

 

 

(Condensed)

 

 

(Condensed)

 

 

 

 

 

 

 

 

(Condensed)

 

 

 

January 28,

 

 

January 29,

 

 

Increase (Decrease)

 

 

* April 30,

 

 

 

2024

 

 

2023

 

 

Dollars

 

 

Percent

 

 

2023

 

Current assets

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Cash and cash equivalents

 

$

12,585

 

 

 

16,725

 

 

 

(4,140

)

 

 

(24.8

)%

 

 

20,964

 

Short-term investments - rabbi trust

 

 

937

 

 

 

2,420

 

 

 

(1,483

)

 

 

(61.3

)%

 

 

1,404

 

Accounts receivable, net

 

 

23,686

 

 

 

21,241

 

 

 

2,445

 

 

 

11.5

%

 

 

24,778

 

Inventories

 

 

46,877

 

 

 

47,627

 

 

 

(750

)

 

 

(1.6

)%

 

 

45,080

 

Short-term note receivable

 

 

260

 

 

 

 

 

 

260

 

 

 

100.0

%

 

 

219

 

Assets held for sale

 

 

 

 

 

1,950

 

 

 

(1,950

)

 

 

(100.0

)%

 

 

 

Current income taxes receivable

 

 

476

 

 

 

238

 

 

 

238

 

 

 

100.0

%

 

 

 

Other current assets

 

 

4,237

 

 

 

2,839

 

 

 

1,398

 

 

 

49.2

%

 

 

3,071

 

Total current assets

 

 

89,058

 

 

 

93,040

 

 

 

(3,982

)

 

 

(4.3

)%

 

 

95,516

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Property, plant & equipment, net

 

 

34,021

 

 

 

37,192

 

 

 

(3,171

)

 

 

(8.5

)%

 

 

36,111

 

Right of use assets

 

 

6,952

 

 

 

8,913

 

 

 

(1,961

)

 

 

(22.0

)%

 

 

8,191

 

Intangible assets

 

 

1,970

 

 

 

2,346

 

 

 

(376

)

 

 

(16.0

)%

 

 

2,252

 

Long-term investments - rabbi trust

 

 

7,083

 

 

 

7,725

 

 

 

(642

)

 

 

(8.3

)%

 

 

7,067

 

Long-term note receivable

 

 

1,530

 

 

 

 

 

 

1,530

 

 

 

100.0

%

 

 

1,726

 

Deferred income taxes

 

 

531

 

 

 

463

 

 

 

68

 

 

 

14.7

%

 

 

480

 

Other assets

 

 

853

 

 

 

919

 

 

 

(66

)

 

 

(7.2

)%

 

 

840

 

Total assets

 

$

141,998

 

 

 

150,598

 

 

 

(8,600

)

 

 

(5.7

)%

 

 

152,183

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Current liabilities

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Accounts payable - trade

 

 

29,793

 

 

 

22,540

 

 

 

7,253

 

 

 

32.2

%

 

 

29,442

 

Accounts payable - capital expenditures

 

 

19

 

 

 

25

 

 

 

(6

)

 

 

(24.0

)%

 

 

56

 

Operating lease liability - current

 

 

2,524

 

 

 

2,785

 

 

 

(261

)

 

 

(9.4

)%

 

 

2,640

 

Deferred compensation - current

 

 

937

 

 

 

2,420

 

 

 

(1,483

)

 

 

(61.3

)%

 

 

1,404

 

Deferred revenue

 

 

1,798

 

 

 

1,430

 

 

 

368

 

 

 

25.7

%

 

 

1,192

 

Accrued expenses

 

 

7,300

 

 

 

6,701

 

 

 

599

 

 

 

8.9

%

 

 

8,533

 

Income taxes payable - current

 

 

1,070

 

 

 

467

 

 

 

603

 

 

 

129.1

%

 

 

753

 

Total current liabilities

 

 

43,441

 

 

 

36,368

 

 

 

7,073

 

 

 

19.4

%

 

 

44,020

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Operating lease liability - long-term

 

 

2,656

 

 

 

4,399

 

 

 

(1,743

)

 

 

(39.6

)%

 

 

3,612

 

Income taxes payable - long-term

 

 

2,072

 

 

 

2,648

 

 

 

(576

)

 

 

(21.8

)%

 

 

2,675

 

Deferred income taxes

 

 

6,177

 

 

 

6,089

 

 

 

88

 

 

 

1.4

%

 

 

5,954

 

Deferred compensation - long-term

 

 

6,856

 

 

 

7,590

 

 

 

(734

)

 

 

(9.7

)%

 

 

6,842

 

Total liabilities

 

 

61,202

 

 

 

57,094

 

 

 

4,108

 

 

 

7.2

%

 

 

63,103

 

Shareholders' equity

 

 

80,796

 

 

 

93,504

 

 

 

(12,708

)

 

 

(13.6

)%

 

 

89,080

 

Total liabilities and shareholders'
   equity

 

$

141,998

 

 

 

150,598

 

 

 

(8,600

)

 

 

(5.7

)%

 

 

152,183

 

Shares outstanding

 

 

12,470

 

 

 

12,312

 

 

 

158

 

 

 

1.3

%

 

 

12,327

 

 

* Derived from audited financial statements.

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 9

March 6, 2024

 

CULP, INC.

CONSOLIDATED STATEMENTS OF CASH FLOWS

FOR THE NINE MONTHS ENDED JANUARY 28, 2024, AND JANAURY 29, 2023

Unaudited

(Amounts in Thousands)

 

 

 

NINE MONTHS ENDED

 

 

 

Amounts

 

 

 

January 28,

 

 

January 29,

 

 

 

2024

 

 

2023

 

Cash flows from operating activities:

 

 

 

 

 

 

Net loss

 

$

(8,954

)

 

$

(26,839

)

Adjustments to reconcile net loss to net cash (used in)
   provided by operating activities:

 

 

 

 

 

 

Depreciation

 

 

4,897

 

 

 

5,228

 

Non-cash inventory (credit) charge (1) (2)

 

 

(1,978

)

 

 

6,301

 

Amortization

 

 

291

 

 

 

323

 

Stock-based compensation

 

 

747

 

 

 

887

 

Deferred income taxes

 

 

172

 

 

 

150

 

Gain on sale of equipment

 

 

(284

)

 

 

(312

)

Non-cash restructuring expense

 

 

330

 

 

 

791

 

Foreign currency exchange gain

 

 

(347

)

 

 

(362

)

Changes in assets and liabilities:

 

 

 

 

 

 

Accounts receivable

 

 

1,040

 

 

 

954

 

Inventories

 

 

 

 

 

12,477

 

Other current assets

 

 

(1,190

)

 

 

(39

)

Other assets

 

 

(107

)

 

 

(76

)

Accounts payable

 

 

963

 

 

 

3,051

 

Deferred revenue

 

 

606

 

 

 

910

 

Accrued expenses and deferred compensation

 

 

(1,437

)

 

 

885

 

Income taxes

 

 

(719

)

 

 

254

 

Net cash (used in) provided by operating activities

 

 

(5,970

)

 

 

4,583

 

Cash flows from investing activities:

 

 

 

 

 

 

Capital expenditures

 

 

(3,249

)

 

 

(1,602

)

Proceeds from the sale of equipment

 

 

363

 

 

 

465

 

Proceeds from note receivable

 

 

240

 

 

 

 

Proceeds from the sale of investments (rabbi trust)

 

 

1,224

 

 

 

70

 

Purchase of investments (rabbi trust)

 

 

(704

)

 

 

(870

)

Net cash used in investing activities

 

 

(2,126

)

 

 

(1,937

)

Cash flows from financing activities:

 

 

 

 

 

 

Common stock surrendered for withholding taxes payable

 

 

(146

)

 

 

(33

)

Payments of debt issuance costs

 

 

 

 

 

(289

)

Net cash used in financing activities

 

 

(146

)

 

 

(322

)

Effect of exchange rate changes on cash and cash equivalents

 

 

(137

)

 

 

(149

)

(Decrease) increase in cash and cash equivalents

 

 

(8,379

)

 

 

2,175

 

Cash and cash equivalents at beginning of year

 

 

20,964

 

 

 

14,550

 

Cash and cash equivalents at end of period

 

$

12,585

 

 

$

16,725

 

Free Cash Flow (3)

 

$

(8,233

)

 

$

2,497

 

 

(1) The non-cash inventory credit of $2.0 million for the nine months ending January 28, 2024, represents credits of approximately $2.0 million related to adjustments for inventory markdown reserve estimates based on the company's policy for aged inventory for both the mattress and upholstery segments, partially offset by a charge of $40,000 which represents the markdown of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

(2) The non-cash inventory charge of $6.3 million for the nine months ending January 29, 2023, represents a $2.9 million charge for the write down of inventory to its net realizable value associated with the mattress fabrics segment, $3.3 million related to markdowns of inventory estimated based on the company's policy for aged inventory for both the mattress and upholstery fabrics segments, and $98,000 for the loss on disposal and markdowns of inventory related to the exit of the company's cut and sew upholstery fabrics operation located in Shanghai, China.

 

(3) See next page for Reconciliation of Free Cash Flow for the nine-month periods ending January 28, 2024, and January 29, 2023.

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 10

March 6, 2024

 

 

CULP, INC.

RECONCILIATION OF FREE CASH FLOW

FOR THE NINE MONTHS ENDED JANUARY 28, 2024, AND JANUARY 29, 2023

Unaudited

(Amounts in Thousands)

 

 

 

NINE MONTHS ENDED

 

 

 

Amounts

 

 

 

January 28,

 

 

January 29,

 

 

 

2024

 

 

2023

 

A) Net cash (used in) provided by operating activities

 

$

(5,970

)

 

$

4,583

 

B) Minus: Capital expenditures

 

 

(3,249

)

 

 

(1,602

)

C) Plus: Proceeds from the sale of equipment

 

 

363

 

 

 

465

 

D) Plus: Proceeds from note receivable

 

 

240

 

 

 

 

E) Plus: Proceeds from the sale of investments (rabbi trust)

 

 

1,224

 

 

 

70

 

F) Minus: Purchase of investments (rabbi trust)

 

 

(704

)

 

 

(870

)

G) Effects of exchange rate changes on cash and cash equivalents

 

 

(137

)

 

 

(149

)

Free Cash Flow

 

$

(8,233

)

 

$

2,497

 

 

 

 

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 11

March 6, 2024

 

CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE THREE MONTHS ENDED JANUARY 28, 2024, AND JANUARY 29, 2023

Unaudited

(Amounts in Thousands)

 

 

 

THREE MONTHS ENDED

 

 

 

Amounts

 

 

 

 

 

Percent of Total Sales

 

 

 

January 28,

 

 

January 29,

 

 

% Over

 

 

January 28,

 

 

January 29,

 

Net Sales by Segment

 

2024

 

 

2023

 

 

(Under)

 

 

2024

 

 

2023

 

Mattress Fabrics

 

$

30,021

 

 

$

24,697

 

 

 

21.6

%

 

 

49.7

%

 

 

47.0

%

Upholstery Fabrics

 

 

30,397

 

 

 

27,826

 

 

 

9.2

%

 

 

50.3

%

 

 

53.0

%

Net Sales

 

$

60,418

 

 

$

52,523

 

 

 

15.0

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit (Loss)

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

Mattress Fabrics

 

$

1,520

 

 

$

(1,237

)

 

 

(222.9

)%

 

 

5.1

%

 

 

(5.0

)%

Upholstery Fabrics

 

 

6,122

 

 

 

3,330

 

 

 

83.8

%

 

 

20.1

%

 

 

12.0

%

Total Segment Gross Profit

 

 

7,642

 

 

 

2,093

 

 

 

265.1

%

 

 

12.6

%

 

 

4.0

%

Restructuring Related Credit (1)

 

 

61

 

 

 

 

 

 

100.0

%

 

 

0.1

%

 

 

 

        Gross Profit

 

$

7,703

 

 

$

2,093

 

 

 

268.0

%

 

 

12.7

%

 

 

4.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General and Administrative
   Expenses by Segment

 

 

 

 

 

 

 

 

 

 

Percent of Sales

 

Mattress Fabrics

 

$

3,102

 

 

$

2,992

 

 

 

3.7

%

 

 

10.3

%

 

 

12.1

%

Upholstery Fabrics

 

 

4,030

 

 

 

3,750

 

 

 

7.5

%

 

 

13.3

%

 

 

13.5

%

Unallocated Corporate Expenses

 

 

2,361

 

 

 

2,423

 

 

 

(2.6

)%

 

 

3.9

%

 

 

4.6

%

Selling, General and Administrative
   Expenses

 

$

9,493

 

 

$

9,165

 

 

 

3.6

%

 

 

15.7

%

 

 

17.4

%

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from Operations
   by Segment

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

Mattress Fabrics

 

$

(1,582

)

 

$

(4,229

)

 

 

(62.6

)%

 

 

(5.3

)%

 

 

(17.1

)%

Upholstery Fabrics

 

 

2,092

 

 

 

(420

)

 

 

(598.1

)%

 

 

6.9

%

 

 

(1.5

)%

Unallocated Corporate Expenses

 

 

(2,361

)

 

 

(2,423

)

 

 

(2.6

)%

 

 

(3.9

)%

 

 

(4.6

)%

        Total Segment Loss from
         Operations

 

 

(1,851

)

 

 

(7,072

)

 

 

(73.8

)%

 

 

(3.1

)%

 

 

(13.5

)%

Restructuring Related Credit (1)

 

 

61

 

 

 

 

 

 

100.0

%

 

 

0.1

%

 

 

 

Restructuring Credit (Expense) (1)

 

 

50

 

 

 

(711

)

 

 

(107.0

)%

 

 

0.1

%

 

 

(1.4

)%

Loss from Operations

 

$

(1,740

)

 

$

(7,783

)

 

 

(77.6

)%

 

 

(2.9

)%

 

 

(14.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation Expense by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

 

$

1,492

 

 

$

1,536

 

 

 

(2.9

)%

 

 

 

 

 

 

Upholstery Fabrics

 

 

154

 

 

 

203

 

 

 

(24.1

)%

 

 

 

 

 

 

Depreciation Expense

 

$

1,646

 

 

$

1,739

 

 

 

(5.3

)%

 

 

 

 

 

 

 

 

Notes

 

(1) See page 13 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the three months ending January 28, 2024, and January 29, 2023.

 

 

 

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 12

March 6, 2024

 

CULP, INC.

STATEMENTS OF OPERATIONS BY SEGMENT

FOR THE NINE MONTHS ENDED JANUARY 28, 2024, AND JANUARY 29, 2023

Unaudited

(Amounts in Thousands)

 

 

 

 

NINE MONTHS ENDED

 

 

 

Amounts

 

 

 

 

 

Percent of Total Sales

 

 

 

January 28,

 

 

January 29,

 

 

% Over

 

 

January 28,

 

 

January 29,

 

Net Sales by Segment

 

2024

 

 

2023

 

 

(Under)

 

 

2024

 

 

2023

 

Mattress Fabrics

 

$

90,619

 

 

$

80,299

 

 

 

12.9

%

 

 

51.5

%

 

 

46.3

%

Upholstery Fabrics

 

 

85,185

 

 

 

93,209

 

 

 

(8.6

)%

 

 

48.5

%

 

 

53.7

%

Net Sales

 

$

175,804

 

 

$

173,508

 

 

 

1.3

%

 

 

100.0

%

 

 

100.0

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Gross Profit (Loss)

 

 

 

 

 

 

 

 

 

 

Gross Margin

 

Mattress Fabrics

 

$

5,997

 

 

$

(7,330

)

 

 

(181.8

)%

 

 

6.6

%

 

 

(9.1

)%

Upholstery Fabrics

 

 

16,780

 

 

 

11,436

 

 

 

46.7

%

 

 

19.7

%

 

 

12.3

%

Total Segment Gross Profit

 

 

22,777

 

 

 

4,106

 

 

 

454.7

%

 

 

13.0

%

 

 

2.4

%

Restructuring Related Charge (1)

 

 

(40

)

 

 

(98

)

 

 

(59.2

)%

 

 

(0.0

)%

 

 

(0.1

)%

        Gross Profit

 

$

22,737

 

 

$

4,008

 

 

 

467.3

%

 

 

12.9

%

 

 

2.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Selling, General and Administrative
   Expenses by Segment

 

 

 

 

 

 

 

 

 

 

Percent of Sales

 

Mattress Fabrics

 

$

9,913

 

 

$

8,821

 

 

 

12.4

%

 

 

10.9

%

 

 

11.0

%

Upholstery Fabrics

 

 

11,969

 

 

 

11,053

 

 

 

8.3

%

 

 

14.1

%

 

 

11.9

%

Unallocated Corporate Expenses

 

 

7,484

 

 

 

7,259

 

 

 

3.1

%

 

 

4.3

%

 

 

4.2

%

Selling, General and Administrative
   Expenses

 

$

29,366

 

 

$

27,133

 

 

 

8.2

%

 

 

16.7

%

 

 

15.6

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(Loss) Income from Operations
   by Segment

 

 

 

 

 

 

 

 

 

 

Operating Margin

 

Mattress Fabrics

 

$

(3,916

)

 

$

(16,151

)

 

 

(75.8

)%

 

 

(4.3

)%

 

 

(20.1

)%

Upholstery Fabrics

 

 

4,811

 

 

 

383

 

 

 

1156.1

%

 

 

5.6

%

 

 

0.4

%

Unallocated Corporate Expenses

 

 

(7,484

)

 

 

(7,259

)

 

 

3.1

%

 

 

(4.3

)%

 

 

(4.2

)%

        Total Segment Loss from
         Operations

 

 

(6,589

)

 

 

(23,027

)

 

 

(71.4

)%

 

 

(3.7

)%

 

 

(13.3

)%

Restructuring Related Charge (1)

 

 

(40

)

 

 

(98

)

 

 

(59.2

)%

 

 

(0.0

)%

 

 

(0.1

)%

Restructuring Expense (1)

 

 

(432

)

 

 

(1,326

)

 

 

(67.4

)%

 

 

(0.2

)%

 

 

(0.8

)%

Loss from Operations

 

$

(7,061

)

 

$

(24,451

)

 

 

(71.1

)%

 

 

(4.0

)%

 

 

(14.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Return on Capital (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

 

 

(10.1

)%

 

 

(24.8

)%

 

 

(59.3

)%

 

 

 

 

 

 

Upholstery Fabrics

 

 

58.9

%

 

 

1.3

%

 

N.M.

 

 

 

 

 

 

 

Unallocated Corporate

 

N.M.

 

 

N.M.

 

 

N.M.

 

 

 

 

 

 

 

Consolidated

 

 

(13.5

)%

 

 

(28.1

)%

 

 

(52.1

)%

 

 

 

 

 

 

Capital Employed (2) (3)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

 

$

67,338

 

 

$

65,882

 

 

 

2.2

%

 

 

 

 

 

 

Upholstery Fabrics

 

 

5,884

 

 

 

15,450

 

 

 

(61.9

)%

 

 

 

 

 

 

Unallocated Corporate

 

 

3,074

 

 

 

3,815

 

 

 

(19.4

)%

 

 

 

 

 

 

Consolidated

 

$

76,296

 

 

$

85,147

 

 

 

(10.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Depreciation Expense by Segment

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

 

$

4,422

 

 

$

4,624

 

 

 

(4.4

)%

 

 

 

 

 

 

Upholstery Fabrics

 

 

475

 

 

 

604

 

 

 

(21.4

)%

 

 

 

 

 

 

Depreciation Expense

 

$

4,897

 

 

$

5,228

 

 

 

(6.3

)%

 

 

 

 

 

 

 

Notes

 

(1) See page 14 for a Reconciliation of Selected Income Statement Information to Adjusted Results for the nine months ending January 28, 2024, and January 29, 2023.

 

(2) See pages 16 through 19 for the Return on Capital Employed by Segment for the nine months ending January 28, 2024, and January 29, 2023.

 

(3) The capital employed balances are as of January 28, 2024, and January 29, 2023.

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 13

March 6, 2024

 

CULP, INC.

RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS

FOR THREE MONTHS ENDED JANUARY 28, 2024, AND JANUARY 29, 2023

Unaudited

(Amounts in Thousands)

 

 

 

As Reported

 

 

 

 

 

Adjusted Results

 

 

 

January 28,

 

 

 

 

 

January 28,

 

 

 

2024

 

 

Adjustments

 

 

2024

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

60,418

 

 

 

 

 

$

60,418

 

Cost of sales (1)

 

 

(52,715

)

 

 

(61

)

 

 

(52,776

)

Gross profit

 

 

7,703

 

 

 

(61

)

 

 

7,642

 

Selling, general and administrative
   expenses

 

 

(9,493

)

 

 

 

 

 

(9,493

)

Restructuring Credit (2)

 

 

50

 

 

 

(50

)

 

 

 

Loss from operations

 

$

(1,740

)

 

 

(111

)

 

$

(1,851

)

 

Notes

 

(1) Cost of sales for the three months ending January 28, 2024, includes a restructuring related credit totaling $61,000 for a gain on disposal of inventory related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

(2) The restructuring credit of $50,000 for the three months ending January 28, 2024, represents a gain from the sale of equipment associated with the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

 

 

 

 

As Reported

 

 

 

 

 

Adjusted Results

 

 

 

January 29,

 

 

 

 

 

January 29,

 

 

 

2023

 

 

Adjustments

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

52,523

 

 

 

 

 

$

52,523

 

Cost of sales

 

 

(50,430

)

 

 

 

 

 

(50,430

)

Gross profit

 

 

2,093

 

 

 

 

 

 

2,093

 

Selling, general and administrative
   expenses

 

 

(9,165

)

 

 

 

 

 

(9,165

)

Restructuring expense (1)

 

 

(711

)

 

 

711

 

 

 

 

Loss from operations

 

$

(7,783

)

 

 

711

 

 

$

(7,072

)

 

 

Notes

(1) Restructuring expense of $711,000 for the three months ending January 29, 2023, represents lease termination costs of $434,000 and an impairment loss for leasehold improvements totaling $277,000 related to consolidation of certain leased facilities located in Ouanaminthe, Haiti.

 

 

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 14

March 6, 2024

 

CULP, INC.

RECONCILIATION OF SELECTED INCOME STATEMENT INFORMATION TO ADJUSTED RESULTS

FOR NINE MONTHS ENDED JANUARY 28, 2024, AND JANUARY 29, 2023

 

Unaudited

(Amounts in Thousands)

 

 

 

As Reported

 

 

 

 

 

Adjusted Results

 

 

 

January 28,

 

 

 

 

 

January 28,

 

 

 

2024

 

 

Adjustments

 

 

2024

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

175,804

 

 

 

 

 

$

175,804

 

Cost of sales (1)

 

 

(153,067

)

 

40

 

 

 

(153,027

)

Gross profit

 

 

22,737

 

 

 

40

 

 

 

22,777

 

Selling, general and administrative
   expenses

 

 

(29,366

)

 

 

 

 

 

(29,366

)

Restructuring expense (2)

 

 

(432

)

 

 

432

 

 

 

 

Loss from operations

 

$

(7,061

)

 

 

472

 

 

$

(6,589

)

 

Notes

 

(1) Cost of sales for the nine months ending January 28, 2024, includes a restructuring related charge totaling $40,000 related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

(2) Restructuring expense of $432,000 for the nine months ending January 28, 2024, represents impairment charges related to equipment totaling $329,000 and $103,000 for employee termination benefits related to the discontinuation of production of cut and sewn upholstery kits at the company's facility in Ouanaminthe, Haiti.

 

 

 

 

 

As Reported

 

 

 

 

 

Adjusted Results

 

 

 

January 29,

 

 

 

 

 

January 29,

 

 

 

2023

 

 

Adjustments

 

 

2023

 

 

 

 

 

 

 

 

 

 

 

Net sales

 

$

173,508

 

 

 

 

 

$

173,508

 

Cost of sales (1)

 

 

(169,500

)

 

98

 

 

 

(169,402

)

Gross profit

 

 

4,008

 

 

 

98

 

 

 

4,106

 

Selling, general and administrative
   expenses

 

 

(27,133

)

 

 

 

 

 

(27,133

)

Restructuring expense (2)

 

 

(1,326

)

 

 

1,326

 

 

 

 

Loss from operations

 

$

(24,451

)

 

 

1,424

 

 

$

(23,027

)

 

Notes

(1) Cost of sales for the nine months ending January 29, 2023, includes restructuring related charges totaling $98,000, which pertained to a loss on disposal and markdowns of inventory related to the exit of the company's cut and sew upholstery fabrics operation located in Shanghai, China.

(2) Restructuring expense of $1.3 million for the nine months ending January 29, 2023, relates to restructuring activities for both the company's cut and sew upholstery fabrics operations located in Shanghai, China, which occurred during the second quarter of fiscal 2023, and located in Ouananminthe, Haiti, which occurred during the third quarter of fiscal 2023. Restructuring expense consists of lease termination costs of $481,000, employee termination benefits of $468,000, impairment losses totaling $357,000 that relate to leasehold improvements and equipment, and $20,000 for other associated costs.

 

 

 

 

 

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 15

March 6, 2024

 

CULP, INC.

CONSOLIDATED STATEMENTS OF ADJUSTED EBITDA

FOR THE TWELVE MONTHS ENDED JANUARY 28, 2024, AND JANUARY 29, 2023

Unaudited

(Amounts in Thousands)

 

 

 

Quarter
Ended

 

 

Quarter
Ended

 

 

Quarter
Ended

 

 

Quarter
Ended

 

 

Trailing
12 Months

 

 

 

April 30,

 

 

July 30,

 

 

October 29,

 

 

January 28,

 

 

January 28,

 

 

 

2023

 

 

2023

 

 

2023

 

 

2024

 

 

2024

 

Net loss

 

$

(4,681

)

 

$

(3,342

)

 

$

(2,424

)

 

$

(3,188

)

 

$

(13,635

)

Income tax expense

 

 

798

 

 

 

701

 

 

 

516

 

 

 

1,027

 

 

 

3,042

 

Interest income, net

 

 

(239

)

 

 

(345

)

 

 

(282

)

 

 

(284

)

 

 

(1,150

)

Depreciation expense

 

 

1,619

 

 

 

1,634

 

 

 

1,617

 

 

 

1,646

 

 

 

6,516

 

Restructuring expense (credit)

 

 

70

 

 

 

338

 

 

 

144

 

 

 

(50

)

 

 

502

 

Restructuring related charge (credit)

 

 

 

 

 

179

 

 

 

(78

)

 

 

(61

)

 

 

40

 

Amortization expense

 

 

115

 

 

 

96

 

 

 

97

 

 

 

98

 

 

 

406

 

Stock based compensation

 

 

258

 

 

 

322

 

 

 

163

 

 

 

262

 

 

 

1,005

 

Adjusted EBITDA

 

$

(2,060

)

 

$

(417

)

 

$

(247

)

 

$

(550

)

 

$

(3,274

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Net Sales

 

 

(3.4

)%

 

 

(0.7

)%

 

 

(0.4

)%

 

 

(0.9

)%

 

 

(1.4

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter
Ended

 

 

Quarter
Ended

 

 

Quarter
Ended

 

 

Quarter
Ended

 

 

Trailing
12 Months

 

 

 

May 1,

 

 

July 31,

 

 

October 30,

 

 

January 29,

 

 

January 29,

 

 

 

2022

 

 

2022

 

 

2022

 

 

2023

 

 

2023

 

Net loss (1)

 

$

(6,023

)

 

$

(5,699

)

 

$

(12,173

)

 

$

(8,968

)

 

$

(32,863

)

Income tax expense

 

 

253

 

 

 

896

 

 

 

1,150

 

 

 

286

 

 

 

2,585

 

Interest income, net

 

 

(26

)

 

 

(17

)

 

 

(79

)

 

 

(196

)

 

 

(318

)

Depreciation expense

 

 

1,791

 

 

 

1,770

 

 

 

1,719

 

 

 

1,739

 

 

 

7,019

 

Restructuring expense

 

 

 

 

 

 

 

 

615

 

 

 

711

 

 

 

1,326

 

Restructuring related charge

 

 

 

 

 

 

 

 

98

 

 

 

 

 

 

98

 

Amortization expense

 

 

142

 

 

 

105

 

 

 

109

 

 

 

109

 

 

 

465

 

Stock based compensation

 

 

253

 

 

 

252

 

 

 

313

 

 

 

322

 

 

 

1,140

 

Adjusted EBITDA (1)

 

$

(3,610

)

 

$

(2,693

)

 

$

(8,248

)

 

$

(5,997

)

 

$

(20,548

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Net Sales

 

 

(6.3

)%

 

 

(4.3

)%

 

 

(14.1

)%

 

 

(11.4

)%

 

 

(8.9

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

% Over (Under)

 

 

(42.9

)%

 

 

(84.5

)%

 

 

(97.0

)%

 

 

(90.8

)%

 

 

(84.1

)%

 

 

(1) Net loss and adjusted EBITDA for the quarter ended October 30, 2022, and the twelve-month period ending January 29, 2023, include a non-cash charge totaling $5.2 million, which represents a $2.9 million write down of inventory to its net realizable value associated with the mattress fabrics segment and $2.3 million related to markdowns of inventory estimated based on the company's policy for aged inventory for both the mattress and upholstery fabrics segments.

 

 

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 16

March 6, 2024

 

CULP, INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT

FOR THE TWELVE MONTHS ENDED JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

 

Adjusted Operating
    (Loss) Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

Average
Capital

 

Return on
Avg. Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

January 28, 2024 (1)

 

Employed (3)

 

Employed (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

$

(6,446

)

$

63,914

 

 

(10.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upholstery Fabrics

 

6,422

 

 

10,901

 

 

58.9

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated Corporate

 

(10,522

)

 

3,547

 

N.M.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

(10,546

)

$

78,361

 

 

(13.5

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Average Capital Employed

As of the three Months January 28, 2024

 

 

As of the three Months October 29, 2023

 

 

As of the three Months Ended July 30, 2023

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

Total assets (4)

$

75,572

 

 

38,085

 

 

28,341

 

 

141,998

 

 

$

75,924

 

 

35,082

 

 

31,154

 

 

142,160

 

 

$

72,286

 

 

37,592

 

 

33,024

 

 

142,902

 

Total liabilities

 

(8,234

)

 

(32,201

)

 

(20,767

)

 

(61,202

)

 

 

(14,739

)

 

(23,758

)

 

(20,035

)

 

(58,532

)

 

 

(11,230

)

 

(25,235

)

 

(20,320

)

 

(56,785

)

Subtotal

$

67,338

 

$

5,884

 

$

7,574

 

$

80,796

 

 

$

61,185

 

$

11,324

 

$

11,119

 

$

83,628

 

 

$

61,056

 

$

12,357

 

$

12,704

 

$

86,117

 

Cash and cash equivalents

 

 

 

 

 

(12,585

)

 

(12,585

)

 

 

 

 

 

 

(15,214

)

 

(15,214

)

 

 

 

 

 

 

(16,812

)

 

(16,812

)

Short-term investments - Rabbi Trust

 

 

 

 

 

(937

)

 

(937

)

 

 

 

 

 

 

(937

)

 

(937

)

 

 

 

 

 

 

(791

)

 

(791

)

Current income taxes receivable

 

 

 

 

 

(476

)

 

(476

)

 

 

 

 

 

 

(340

)

 

(340

)

 

 

 

 

 

 

(202

)

 

(202

)

Long-term investments - Rabbi Trust

 

 

 

 

 

(7,083

)

 

(7,083

)

 

 

 

 

 

 

(6,995

)

 

(6,995

)

 

 

 

 

 

 

(7,204

)

 

(7,204

)

Deferred income taxes - non-current

 

 

 

 

 

(531

)

 

(531

)

 

 

 

 

 

 

(472

)

 

(472

)

 

 

 

 

 

 

(476

)

 

(476

)

Deferred compensation - current

 

 

 

 

 

937

 

 

937

 

 

 

 

 

 

 

937

 

 

937

 

 

 

 

 

 

 

791

 

 

791

 

Accrued restructuring

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

10

 

 

10

 

Income taxes payable - current

 

 

 

 

 

1,070

 

 

1,070

 

 

 

 

 

 

 

998

 

 

998

 

 

 

 

 

 

 

526

 

 

526

 

Income taxes payable - long-term

 

 

 

 

 

2,072

 

 

2,072

 

 

 

 

 

 

 

2,055

 

 

2,055

 

 

 

 

 

 

 

2,710

 

 

2,710

 

Deferred income taxes - non-current

 

 

 

 

 

6,177

 

 

6,177

 

 

 

 

 

 

 

5,663

 

 

5,663

 

 

 

 

 

 

 

5,864

 

 

5,864

 

Deferred compensation non-current

 

 

 

 

 

6,856

 

 

6,856

 

 

 

 

 

 

 

6,748

 

 

6,748

 

 

 

 

 

 

 

6,966

 

 

6,966

 

Total Capital Employed

$

67,338

 

$

5,884

 

$

3,074

 

$

76,296

 

 

$

61,185

 

$

11,324

 

$

3,562

 

$

76,071

 

 

$

61,056

 

$

12,357

 

$

4,086

 

$

77,499

 

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 17

March 6, 2024

 

CULP, INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT - CONTINUED

FOR THE TWELVE MONTHS ENDED JANUARY 28, 2024

Unaudited

(Amounts in Thousands)

 

 

As of the three Months Ended April 30, 2023

 

 

As of the three Months Ended January 29, 2023

 

 

 

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

 

 

 

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

 

 

 

 

Total assets (4)

$

75,494

 

 

39,127

 

 

37,562

 

 

152,183

 

 

$

75,393

 

 

39,817

 

 

35,388

 

 

150,598

 

 

 

 

 

 

Total liabilities

 

(11,387

)

 

(29,638

)

 

(22,078

)

 

(63,103

)

 

 

(9,511

)

 

(24,367

)

 

(23,216

)

 

(57,094

)

 

 

 

 

 

Subtotal

$

64,107

 

$

9,489

 

$

15,484

 

$

89,080

 

 

$

65,882

 

$

15,450

 

$

12,172

 

$

93,504

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

(20,964

)

 

(20,964

)

 

 

 

 

 

 

(16,725

)

 

(16,725

)

 

 

 

 

 

Short-term investments - Rabbi Trust

 

 

 

 

 

(1,404

)

 

(1,404

)

 

 

 

 

 

 

(2,420

)

 

(2,420

)

 

 

 

 

 

Current income taxes receivable

 

 

 

 

 

-

 

 

-

 

 

 

 

 

 

 

(238

)

 

(238

)

 

 

 

 

 

Long-term investments - Rabbi Trust

 

 

 

 

 

(7,067

)

 

(7,067

)

 

 

 

 

 

 

(7,725

)

 

(7,725

)

 

 

 

 

 

Deferred income taxes - non-current

 

 

 

 

 

(480

)

 

(480

)

 

 

 

 

 

 

(463

)

 

(463

)

 

 

 

 

 

Deferred compensation - current

 

 

 

 

 

1,404

 

 

1,404

 

 

 

 

 

 

 

2,420

 

 

2,420

 

 

 

 

 

 

Income taxes payable - current

 

 

 

 

 

753

 

 

753

 

 

 

 

 

 

 

467

 

 

467

 

 

 

 

 

 

Income taxes payable - long-term

 

 

 

 

 

2,675

 

 

2,675

 

 

 

 

 

 

 

2,648

 

 

2,648

 

 

 

 

 

 

Deferred income taxes - non-current

 

 

 

 

 

5,954

 

 

5,954

 

 

 

 

 

 

 

6,089

 

 

6,089

 

 

 

 

 

 

Deferred compensation non-current

 

 

 

 

 

6,842

 

 

6,842

 

 

 

 

 

 

 

7,590

 

 

7,590

 

 

 

 

 

 

Total Capital Employed

$

64,107

 

$

9,489

 

$

3,197

 

$

76,793

 

 

$

65,882

 

$

15,450

 

$

3,815

 

$

85,147

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Capital Employed (3)

$

63,914

 

$

10,901

 

$

3,547

 

$

78,361

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

 

(1) See last page of this presentation for calculation.

 

(2) Return on average capital employed represents the twelve months operating (loss) income as of January 28, 2024, divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term and long-term investments – Rabbi Trust, income taxes receivable and payable, accrued restructuring, noncurrent deferred income tax assets and liabilities, and current and non-current deferred compensation.

 

(3) Average capital employed was computed using the five quarterly periods ending January 28, 2024, October 29, 2023, July 30, 2023, April 30, 2023, and January 29, 2023.

 

(4) Intangible assets are included in unallocated corporate for all periods presented and therefore, have no effect on capital employed and return on capital employed for our mattress fabrics and upholstery fabrics segments.

 

 

-MORE-

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 18

March 6, 2024

 

CULP INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT

FOR THE TWELVE MONTHS ENDED JANUARY 29, 2023

Unaudited

(Amounts in Thousands)

 

 

 

Adjusted Operating
 (Loss) Income

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Twelve Months
Ended

 

Average
 Capital

 

Return on
Avg. Capital

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Janaury 29, 2023 (1)

 

Employed (3)

 

Employed (2)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress Fabrics

$

(19,053

)

$

76,826

 

 

(24.8

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Upholstery Fabrics

 

268

 

 

20,290

 

 

1.3

%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Unallocated Corporate

 

(9,626

)

 

3,955

 

N.M.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Total

$

(28,411

)

$

101,072

 

 

(28.1

)%

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 Average Capital Employed

As of the three Months Ended January 29, 2023

 

 

As of the three Months Ended October 30, 2022

 

 

As of the three Months Ended July 31, 2022

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

Total assets (4)

$

75,393

 

 

39,817

 

 

35,388

 

 

150,598

 

 

$

78,366

 

 

44,934

 

 

38,330

 

 

161,630

 

 

$

90,842

 

 

51,053

 

 

38,595

 

 

180,490

 

Total liabilities

 

(9,511

)

 

(24,367

)

 

(23,216

)

 

(57,094

)

 

 

(9,895

)

 

(26,108

)

 

(23,519

)

 

(59,522

)

 

 

(11,934

)

 

(30,762

)

 

(23,799

)

 

(66,495

)

Subtotal

$

65,882

 

$

15,450

 

$

12,172

 

$

93,504

 

 

$

68,471

 

$

18,826

 

$

14,811

 

$

102,108

 

 

$

78,908

 

$

20,291

 

$

14,796

 

$

113,995

 

Cash and cash equivalents

 

 

 

 

 

(16,725

)

 

(16,725

)

 

 

 

 

 

 

(19,137

)

 

(19,137

)

 

 

 

 

 

 

(18,874

)

 

(18,874

)

Short-term investments - Rabbi Trust

 

 

 

 

 

(2,420

)

 

(2,420

)

 

 

 

 

 

 

(2,237

)

 

(2,237

)

 

 

 

 

 

 

 

 

 

Current income taxes receivable

 

 

 

 

 

(238

)

 

(238

)

 

 

 

 

 

 

(510

)

 

(510

)

 

 

 

 

 

 

(798

)

 

(798

)

Long-term investments - Rabbi Trust

 

 

 

 

 

(7,725

)

 

(7,725

)

 

 

 

 

 

 

(7,526

)

 

(7,526

)

 

 

 

 

 

 

(9,567

)

 

(9,567

)

Deferred income taxes - non-current

 

 

 

 

 

(463

)

 

(463

)

 

 

 

 

 

 

(493

)

 

(493

)

 

 

 

 

 

 

(546

)

 

(546

)

Deferred compensation - current

 

 

 

 

 

2,420

 

 

2,420

 

 

 

 

 

 

 

2,237

 

 

2,237

 

 

 

 

 

 

 

 

 

 

Accrued restructuring

 

 

 

 

 

 

 

 

 

 

 

 

 

 

33

 

 

33

 

 

 

 

 

 

 

 

 

 

Income taxes payable - current

 

 

 

 

 

467

 

 

467

 

 

 

 

 

 

 

969

 

 

969

 

 

 

 

 

 

 

587

 

 

587

 

Income taxes payable - long-term

 

 

 

 

 

2,648

 

 

2,648

 

 

 

 

 

 

 

2,629

 

 

2,629

 

 

 

 

 

 

 

3,118

 

 

3,118

 

Deferred income taxes - non-current

 

 

 

 

 

6,089

 

 

6,089

 

 

 

 

 

 

 

5,700

 

 

5,700

 

 

 

 

 

 

 

6,007

 

 

6,007

 

Deferred compensation

 

 

 

 

 

7,590

 

 

7,590

 

 

 

 

 

 

 

7,486

 

 

7,486

 

 

 

 

 

 

 

9,528

 

 

9,528

 

Total Capital Employed

$

65,882

 

$

15,450

 

$

3,815

 

$

85,147

 

 

$

68,471

 

$

18,826

 

$

3,962

 

$

91,259

 

 

$

78,908

 

$

20,291

 

$

4,251

 

$

103,450

 

 

 

 

-MORE-


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 19

March 6, 2024

 

CULP INC.

RETURN ON CAPITAL EMPLOYED BY SEGMENT - CONTINUED

FOR THE TWELVE MONTHS ENDED JANUARY 29, 2023

Unaudited

(Amounts in Thousands)

 

 

As of the three Months Ended May 1, 2022

 

 

As of the three Months Ended January 30, 2022

 

 

 

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

 

 

 

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

 

 

 

 

Total assets (4)

$

92,609

 

 

51,124

 

 

33,830

 

 

177,563

 

 

$

103,370

 

 

67,272

 

 

40,925

 

 

211,567

 

 

 

 

 

 

Total liabilities

 

(8,569

)

 

(25,915

)

 

(23,578

)

 

(58,062

)

 

 

(16,540

)

 

(45,596

)

 

(22,697

)

 

(84,833

)

 

 

 

 

 

Subtotal

$

84,040

 

$

25,209

 

$

10,252

 

$

119,501

 

 

$

86,830

 

$

21,676

 

$

18,228

 

$

126,734

 

 

 

 

 

 

Cash and cash equivalents

 

 

 

 

 

(14,550

)

 

(14,550

)

 

 

 

 

 

 

(11,780

)

 

(11,780

)

 

 

 

 

 

Short-term investments -
   Available-For-Sale

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(438

)

 

(438

)

 

 

 

 

 

Short-term investments -
  Held-To-Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(1,315

)

 

(1,315

)

 

 

 

 

 

Current income taxes receivable

 

 

 

 

 

(857

)

 

(857

)

 

 

 

 

 

 

(367

)

 

(367

)

 

 

 

 

 

Long-term investments -
  Held-To-Maturity

 

 

 

 

 

 

 

 

 

 

 

 

 

 

(8,677

)

 

(8,677

)

 

 

 

 

 

Long-term investments - Rabbi Trust

 

 

 

 

 

(9,357

)

 

(9,357

)

 

 

 

 

 

 

(9,223

)

 

(9,223

)

 

 

 

 

 

Deferred income taxes - non-current

 

 

 

 

 

(528

)

 

(528

)

 

 

 

 

 

 

(500

)

 

(500

)

 

 

 

 

 

Income taxes payable - current

 

 

 

 

 

413

 

 

413

 

 

 

 

 

 

 

240

 

 

240

 

 

 

 

 

 

Income taxes payable - long-term

 

 

 

 

 

3,097

 

 

3,097

 

 

 

 

 

 

 

3,099

 

 

3,099

 

 

 

 

 

 

Deferred income taxes - non-current

 

 

 

 

 

6,004

 

 

6,004

 

 

 

 

 

 

 

5,484

 

 

5,484

 

 

 

 

 

 

Deferred compensation

 

 

 

 

 

9,343

 

 

9,343

 

 

 

 

 

 

 

9,180

 

 

9,180

 

 

 

 

 

 

Total Capital Employed

$

84,040

 

$

25,209

 

$

3,817

 

$

113,066

 

 

$

86,830

 

$

21,676

 

$

3,931

 

$

112,437

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Mattress

 

Upholstery

 

Unallocated

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Fabrics

 

Fabrics

 

Corporate

 

Total

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Average Capital Employed (3)

$

76,826

 

$

20,290

 

$

3,955

 

$

101,072

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Notes

 

(1) See last page of this presentation for calculation.

(2) Return on average capital employed represents the last twelve months operating (loss) income as of January 29, 2023, divided by average capital employed. Average capital employed does not include cash and cash equivalents, short-term investments Available-For-Sale, short-term and long-term investments Held-To-Maturity, short-term and long-term investments – Rabbi Trust, accrued restructuring, income taxes receivable and payable, noncurrent deferred income tax assets and liabilities, and current and non-current deferred compensation.

(3) Average capital employed was computed using the five quarterly periods ending January 29, 2023, October 30, 2022, July 31, 2022, May 1, 2022, and January 30, 2022.

(4) Intangible assets are included in unallocated corporate for all periods presented and therefore, have no effect on capital employed and return on capital employed for our mattress fabrics and upholstery fabrics segments.

 

 

 


CULP Announces Results for Third Quarter Fiscal 2024, With Continued Sequential and Year-Over-Year Improvement

Page 20

March 6, 2024

 

 

CULP INC.

CONSOLIDATED STATEMENTS OF ADJUSTED OPERATING (LOSS) INCOME

FOR THE TWELVE MONTHS ENDED JANUARY 28, 2024, AND JANUARY 29, 2023

 

 

 

Quarter Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trailing 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months

 

 

 

4/30/2023

 

 

07/30/2023

 

 

10/29/2023

 

 

01/28/2024

 

 

01/28/2024

 

Mattress Fabrics

 

$

(2,530

)

 

$

(1,398

)

 

$

(936

)

 

$

(1,582

)

 

$

(6,446

)

Upholstery Fabrics

 

 

1,611

 

 

 

1,328

 

 

 

1,391

 

 

 

2,092

 

 

 

6,422

 

Unallocated Corporate

 

 

(3,038

)

 

 

(2,495

)

 

 

(2,628

)

 

 

(2,361

)

 

 

(10,522

)

Operating loss

 

$

(3,957

)

 

$

(2,565

)

 

$

(2,173

)

 

$

(1,851

)

 

$

(10,546

)

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Quarter Ended

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Trailing 12

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

Months

 

 

 

5/1/2022

 

 

7/31/2022

 

 

10/30/2022

 

 

1/29/2023

 

 

1/29/2023

 

Mattress Fabrics

 

$

(2,901

)

 

$

(2,921

)

 

$

(9,002

)

 

$

(4,229

)

 

$

(19,053

)

Upholstery Fabrics

 

 

(116

)

 

 

542

 

 

 

262

 

 

 

(420

)

 

 

268

 

Unallocated Corporate

 

 

(2,366

)

 

 

(2,359

)

 

 

(2,478

)

 

 

(2,423

)

 

 

(9,626

)

Operating loss

 

$

(5,383

)

 

$

(4,738

)

 

$

(11,218

)

 

$

(7,072

)

 

$

(28,411

)

% Over (Under)

 

 

(26.5

)%

 

 

(45.9

)%

 

 

(80.6

)%

 

 

(73.8

)%

 

 

(62.9

)%

 

-END-